Victorian builders query audit

Victoria’s construction industry fears an auditor-general’s investigation that found shoddy paperwork was undermining the state’s $24 billion-a-year industry will lead to more red tape.

Auditor-General
Des Pearson
launched an investigation into the building permit system earlier this year. His report is expected to be tabled in Parliament tomorrow.

The Australian Financial Review has learned his report is scathing of the system, which is overseen by the Building Commission, after an audit at a selection of councils found 95 per cent of permit files failed to meet the required standard.

The report also raises concerns that the system allows for collusion between construction companies and private-sector surveyors who issue building permits.

So critical are Mr Pearson’s findings that several senior industry figures have labelled the report an over-reaction and are concerned that it could lead to costly regulation or a curtailment of the state’s private building surveyor system.

Under the Kennett government in the 1990s, responsibility for issuing building permits was taken from councils and given to private building surveyors.

Housing Industry Association (HIA) executive director
Gil King
said that change had helped the state’s development industry “in leaps and bounds".

The fear was that the report was “somehow an attack on the building surveyor system, that would cause us considerable concern", he said.

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That could have implications as Australia moved towards a uniform licensing system in 2013, he said.

“For the last 15 years, everyone has been holding up the Victorian model as the pinnacle of the models around . . . that may not be the perception after the Auditor-General’s report," Mr King said.

He had not read the report but had been briefed on some of its findings.

Of the claim that 95 per cent of permit files failed to comply with the law, he said that was “absolute crap".

Mr King worked on performance audits at the Building Commission several years before joining the HIA and said it was not unusual to find minor “administrative defects". But he said those defects were sometimes down to a difference of opinion or an incorrect standard citation.

He argued it was unlikely any defect in the permit process would result in sub-standard work because Victoria’s system of site inspections superseded the paper-based pre-construction permit process.

Despite asking to be part of the investigation, the HIA was not consulted, prompting Mr King to write to every state parliamentarian outlining his disappointment at being excluded from the process.

“It is disgraceful," he said.

Another senior industry source said the report’s finding that the system was corruptible was not consistent with the experience on the ground.

“I have got to say I’m surprised," the source said. “If there are examples in this report, then bring it on."

Grocon chief executive
Daniel Grollo
said that although the Vic­torian permit process was the best in the nation, like any large system it could probably be improved.

But Mr Grollo said that improvement needed to genuinely enhance the efficiency and operation of the system “rather than introducing more regulation and more red tape".

“You look at the process we have got in Victoria . . . it seems to me that we are operating extremely efficiently," he said.

He said any change to the system that put more onus on councils to police the issuing of state building permits could be problematic.

In October, the building commissioner, Tony Arnel, announced an overhaul of compliance audits. This meant every surveyor would be audited biennially. The Auditor-General’s office and Planning Minister Matthew Guy declined to comment when contacted yesterday.

When he announced the inquiry, Mr Pearson cited figures that during the 2009 financial year, 113,670 building permits were issued for works valued at almost $24 billion.